This September marked the second anniversary of the death of Islam Karimov, the former President of Uzbekistan, and the de-facto accession to power of Shavkat Mirziyoyev (who was later officially elected to the presidency in December 2016).
In record-breaking time President Mirziyoyev solved border disputes with Kyrgyzstan and Tajikistan – which had previously been considered unsolvable, significantly strengthened relations with Kazakhstan, conducted sweeping economic reforms, and opened Uzbekistan to foreign investments.
The activity of the new reformist president led to positive changes not only in Uzbekistan itself, but in the region as a whole. The change of power in Uzbekistan – the most highly populated Central Asian country, located right in the middle of the region – marked the beginning of the Central Asian Spring, which, in contrast to the Arab Spring, has been characterized by gradual reforms and, above all, economic liberalization.
In March 2018, for the first time since the beginning of the 2000’s, a summit of the Central Asian countries’ leaders took place in Astana, Kazakhstan. It was attended by presidents of every country in the region (except Turkmenistan which was represented by the Chair of the country’s parliament). This summit, along with a notable strengthening of connections between the two most prominent countries of the region – Kazakhstan and Uzbekistan – laid the ground for talks regarding the creation of a new regional union, the goal of which would be to strengthen the economic independence of the Central Asian region, and later its political independence as well.
The first attempts at economic unification of Central Asian countries date back to the mid-1990’s, and were being undertaken as late as the mid-2000’s. However, each time those attempts were beset with insurmountable obstacles – the position of the late Uzbek president Islam Karimov who basically isolated Uzbekistan from any foreign influence, the border conflicts between Uzbekistan, Tajikistan, and Kyrgyzstan, and the personal ambitions of the Central Asian countries’ leaders.
It is rather ironic that Uzbekistan – which for а long time halted the process of regional integration – is today, along with Kazakhstan, its primary moving force. Riding the wave of “the Uzbek thaw,” and highlighted against the backdrop of problems associated with the functioning of the Eurasian economic Union, for the first time in many years the conditions for the creation of a regional union are favorable.
For now, the countries of the region are treading very carefully when it comes to this idea. There have been too many unsuccessful attempts at unification in the past, and interstate contradictions are still too strong, as well as the differences in the countries’ approach to issues. Besides, such unification may not be well liked by the “Big Neighbors” of the region – Russia and China – who may put forth efforts to prevent the emergence of a strong and independent regional player.
The geographic location of Central Asia also provides its opponents with an advantage: each country individually (and the region as a whole) is landlocked, and as a consequence the operation of logistical and energy chains is fully dependent on the goodwill of the “Big Neighbors.” Only fundamental changes to the very structure of the regions’ economy can help overcome this dependence. Such changes are now underway.
Kazakhstan and Uzbekistan are striving to abandon the natural resource-dependent model and develop innovations. An example of that is the “Astana Hub” – a financial and technological center which has the capabilities to speed up the technological upgrading not just of Kazakhstan alone, but the entire Central Asian region.
The simultaneous development of an IT ecosystem of innovations in the countries of Central Asia will create new possibilities for regional collaboration, as well as for collaboration of the Central Asian IT sector with global centers of the IT industry.
Central Asia’s old economic model relied on each of the countries having different and separate economic relations with its “Big Neighbors” and – facilitated by those “Big Neighbors” acting as intermediaries – with countries of the West. The new Central Asian model envisions the five countries – Uzbekistan, Kazakhstan, Tajikistan, Kyrgyzstan, and Turkmenistan – being integrated into a common economic market and having direct connections with Western markets, bypassing the intermediary function of the “Big Neighbors.” As shown through the success of the European Bank’s ‘Investing in Central Asia’ forum which aimed to highlight opportunities for business expansion into the region, Central Asian countries will become integrated into the world ecosystem both in the information and economic realms.
However, in order to implement this plan both the Western business world and the political decision makers have lots of work ahead of them. As the new “IT tiger,” Central Asia may be interesting to the world industry’s giants only as a united region, and they must view it as such already, by extending a certain credibility to the new economic initiatives originating in that region. This means opening regional offices in the local IT clusters and entrusting them first with outsourcing and then with R&D, serving as evangelists of the new economy in contacts with representatives of the Central Asian countries’ governments, and considering the possibilities of investing into local startups jointly with governments. Western policymakers will need to get ready to provide the most favorable environment to the IT industry for any trade and economic relations with countries of the region.
As energy exports are the foundation of economic well-being for the majority of the region’s countries, it places those countries in the position of competitors who are dependent on their neighboring states, above all Russia and China. Developing advanced technologies, attracting Western investments and Western experience, and creating a Central Asian IT market will serve a dual purpose: in reducing the Central Asian countries’ dependence on their neighbors, and in becoming the catalyst for unification processes in the region.
Shifting Sands: Chinese encroachment in Central Asia and challenges to US supremacy in the Gulf
China and Russia are as much allies as they are rivals.
A joint Tajik-Chinese military exercise in a Tajik region bordering on China’s troubled north-western region of Xinjiang suggests that increased Chinese-Russian military cooperation has not eroded gradually mounting rivalry in Central Asia, long viewed by Moscow as its backyard.
The exercise, the second in three years, coupled with the building by China of border guard posts and a training centre as well as the creation of a Chinese security facility along the 1,300 kilometre long Tajik Afghan Border, Chinese dominance of the Tajik economy, and the hand over of Tajik territory almost two decades ago, challenges Russian-Chinese arrangements in the region.
The informal arrangement involved a division of labour under which China would expand economically in Central Asia while Russia would guarantee the region’s security.
The exercise comes days after China and Russia operated their first joint air patrol and months after Tajik and Russian forces exercised jointly.
The “exercise represents a next step in China’s overall encroachment upon Russia’s self-proclaimed ‘sphere of influence’ in Central Asia,” said Russia expert Stephen Blank.
“Moscow has given remarkably little consideration to the possibility that China will build on its soft power in Central Asia to establish security relationships or even bases and thus accelerate the decline of Russian influence there,” added Eurasia scholar Paul Goble.
The perceived encroachment is but the latest sign that Russia is seeking to balance its determination to ally itself with China in trying to limit US power with the fact the Chinese and Russian interests may be diverging.
The limitations of Russian Chinese cooperation have long been evident.
China, for example, has refrained from recognizing Russian-inspired declarations of independence in 2008 of two regions of Georgia, Abkhazia and South Ossetia that recently sparked anti-government protests in Tbilisi.
China similarly abstained in a 2014 United Nations Security Council vote on a resolution that condemned Russia’s annexation of Crimea.
Meanwhile, Chinese dependence on Russian military technology is diminishing, potentially threatening a key Russian export market. China in 2017 rolled out its fifth generation Chengdu J-20 fighter that is believed to be technologically superior to Russia SU-57E.
Perhaps most fundamentally, Chinese president Xi Jinping opted in 2013 to unveil his Belt and Road initiative in the Kazakh capital of Astana rather than Moscow.
By doing so and by so far refusing to invest in railroads and roads that would turn Russia into a transportation hub, Mr. Xi effectively relegated Russia to the status of second fiddle, at least as far as the Belt and Road’s core transportation infrastructure pillar is concerned.
China’s recently published latest defense white paper nonetheless praised the continued development of a “high level” military relationship with Russia that is “enriching the China-Russia comprehensive strategic partnership of coordination for a new era and playing a significant role in maintaining global strategic stability.”
In a bid to ensure Russia remains a key player on the international stage and exploit mounting tension in the Gulf, Russian deputy foreign minister and special representative to the Middle East and Africa Mikhail Bogdanov this week proposed a collective security concept that would replace the Gulf’s US defense umbrella and position Russia as a power broker alongside the United States.
The concept would entail creation of a “counter-terrorism coalition (of) all stakeholders” that would be the motor for resolution of conflicts across the region and promote mutual security guarantees. It would involve the removal of the “permanent deployment of troops of extra-regional states in the territories of states of the Gulf,” a reference to US, British and French forces and bases.
Mr. Bogdanov’s proposal called for a “universal and comprehensive” security system that would take into account “the interests of all regional and other parties involved, in all spheres of security, including its military, economic and energy dimensions” and ensure the provision of humanitarian assistance.
The coalition to include the Gulf states, Russia, China, the US, the European Union and India as well as other stakeholders, a likely reference to Iran, would be launched at an international conference on security and cooperation in the Gulf.
It was not clear how feuding Gulf states like Qatar, Saudi Arabia, the United Arb Emirates and Iran would be persuaded to sit at one table. The proposal suggested that Russia’s advantage was that it maintained good relations with all parties.
“Russia’s contributions to the fight against Islamic terrorist networks and the liberation of parts of Syria and Iraq can be regarded as a kind of test for the role of sheriff in a Greater Eurasia” that would include the Middle East, said political scientist Dmitry Yefremenko.
Mr. Putin this week asserted himself as sheriff by signalling his support for embattled former Kyrgyz president Almazbek Atambayev, a Putin crony who has been charged with corruption. Following a meeting in Moscow, Mr. Putin urged Mr Atembayev’s nemesis. president Sooronbai Jeenbekov, not to press charges.
At the same time, Mr. Putin, building on his visit to Kyrgyzstan in March, offered Mr. Jeenbekov a carrot.
Kyrgyzstan “needs political stability. Everybody needs to unite around the current president and to help him develop the state. We have many plans for cooperation with Kyrgyzstan and we are absolutely determined to work together with the current leadership to fulfill these plans,” Mr. Putin said.
Russia and Kyrgyzstan signed an agreement during the visit to expand by 60 hectares the Kant Air Base 20 kilometres east of the capital Bishkek that is used by the Russian Air Force and increase the rent Russia pays.
Mr. Putin further lavished his Kyrgyz hosts with US$6 billion in deals ranging from power, mineral resources and hydrocarbons to industry and agriculture.
Mr. Putin also allocated US$200 million for the upgrading of customs infrastructure and border equipment to put an end to the back-up of dozens of trucks on the Kazakh-Kyrgyz border because Kyrgyzstan has so far been unable to comply with the technical requirements of the Russia-led Eurasian Economic Union (EEU).
Uzbek president Shavkat Mirziyaev last month gave the EEU, that groups Russia, Kazakhstan, Kyrgyzstan Belarus, and Armenia, a boost by declaring that Uzbekistan would need to join the trade bloc to ensure access to its export markets.
EEU members account for 70 percent of Uzbek exports.
Said Russia and Eurasia scholar Paul Stronski: “China’s deft diplomacy towards Russia — along with both states’ desires to keep the West out of their common backyard — has kept tensions behind closed doors. But with China now recognising it may need to strengthen its security posture in the region, it is unclear how long this stability will last.”
Chimes from Tashkent
Located at the new center of global attraction for economic activity, Pakistan and Uzbekistan share a long string of relations. After the independence from the soviets, Pakistan was among the first countries to recognize it. In 1992, Pakistan established their first diplomatic sanctuary in Tashkent. Since then delegations from both the countries paid visits to each other.
The bond shared between the two countries, that lie in close proximity, is strengthened by similar eastern culture and fortified by the religious ties. This sharing of cultural and religious values is clearly visible in the national language of Pakistan which borrows thousands of words from Uzbekistani language. This nexus is now getting even stronger with the increase in co-operations in social and economic sectors.
Relations between both the states saw an unprecedented growth in recent times and this social integration is ever growing. During the last year only,
63events such as seminars, presentations and business forums were arranged for general public. Whereas, the Uzbek Embassy had a significant number of bilateral meetings with the top tier of business community including several associations and unions. The same sentiment was reciprocated by Pakistani side when more than 50 companies paid visit to Uzbekistan with the purpose of investment. There were a number of exhibitions, events and investment forums in Tashkent, Jizzakh and Bukhara. Eight different Pakistani companies participated in such events.
Uzbekistan and Pakistan have also been working on 38different joint ventures for launching import/export operations.
In economic sphere, Islamabad and Tashkent hold great trade potential. In just 2018, the mutual trade between both countries crossed USD 98.4 million’s mark, which means a raise of around 170%.Prior to 2018 in 2017 numbers of economic activity between two states were low and accounted for just USD 36.6 million.
In 2018 Pakistani export to Uzbekistan increased for 150% and amounted 66 million USD (in 2017 – 26 million USD).
Last year Ambassador of Uzbekistan to Pakistan Mr. Furqat A. Sidikov while addressing business community at Islamabad Chamber of Commerce and Industry expressed that trade volume between Pakistan and Uzbekistan has the potential to rise up to USD 1billion in next 5-6 years. It clearly signifies that both countries can provide enormous benefit to each other’s socio-economic segment. Pakistan has been exporting edibles like mango, citruses, raw and refined sugar. Furthermore, chemical products, pharmaceutical products, and leather and textile goods are major exports of Pakistan to Uzbekistan.
Uzbekistan is also a hub for petrochemical goods, cotton and silk goods. Its exports to Pakistan includes: leather raw materials, petrochemical products and mineral fertilizers, cotton yarn, cotton fiber, raw silk, plastic products, agricultural machinery, clothing, etc. Not only this, dry fruits and vegetables are also exported from Uzbekistan to Pakistan.
In 2018 Uzbekistan-Pakistan Business Council was established in Islamabad in order to facilitate and support the business community in two countries. Apart for this, several forums are also established in main cities of Pakistan to boost up the economic potential.
Accessibility remains a key subject in establishing people to people relations thus recognizing this flight route from Tashkent-Lahore-Tashkent was resumed in April of 2017. Both states also look forward to initiate new routes from Islamabad and Karachi as well. Earlier in May Uzbekistan’s Ambassador to Pakistan had a meeting with Chairman Senate of Pakistan to discuss the inter-parliamentarian cooperation between Pakistan and Uzbekistan. Sideways to expanding parliamentarian relations it was also discussed to further strengthen the cooperation on transport sector to provide uninterrupted route to trade of goods.
Both countries share many economical and regional platform and are member of Organization of Islamic countries (OIC), Shanghai Cooperation Organization (SCO), and Economic Cooperation organization (ECO)and others. Multiple times these platforms were used to freshen up the relations between two countries. Based on mutual trust both countries can have free trade agreements to amplify the relations between them.
Enormous potential lies in social, economic and political sectors on which both countries can work. Both countries can play a key role in bringing peaceful non-military solution to misery in Afghanistan as well as in the region. Pakistan needs to explore new avenues for cooperation with countries like Uzbekistan and extract the maximum benefit for itself.
Uzbekistan understands importance of Pakistan in keeping stability and prosperity of the whole South Asian region. Both countries are interested in continuing bilateral partnership on all key issues of the regional security and stability agenda, including the conflict resolution in Afghanistan and expansion of infrastructure, trade and economic ties between Central Asia and Pakistan.
Uzbekistan initiated logistic project that project will include the construction of the massive railroad transport corridor “Uzbekistan-Afghanistan-Pakistan”. In details, this corridor will compose the rail line “Uzbekistan-Mazarisharif” which has been already realized between Uzbekistan and Afghanistan as well as construction of new rail road “Mazari-Sharif-Kabul-Peshawar”.
In perspective, full realization of this unique transport corridor, will make Pakistan as a Central regional trade hub between South Asian and Central Asian regions.
No More Business as Usual: Improving Water Usage in Central Asia
Central Asia’s future economic development, including its energy and water security, depends to a great extent on how effectively countries manage their natural water supplies, especially under increased pressures from climate variability, economic growth, and population expansion.
The population of Central Asia is expected to grow by around 30% by 2050. As such, demand for water services will also increase significantly.
Central Asia is heavily dependent on agriculture, which provides livelihoods for about 50% of the population in some countries. But its level of water productivity is one of the lowest in the Europe and Central Asia region. More efficient use of water in the economy could significantly contribute to increased agricultural productivity, green energy production and the health of the region’s environmental assets.
According to estimates, the adoption of modern agricultural techniques and methods could increase the region’s crop yields by over 20% by 2030, and by 50% by 2050. On the other hand, if countries continue a “business as usual” approach, Central Asia is among the regions that could experience a significantly negative impact on GDP under climate change. Each year, inadequate water supply and sanitation leads to overall economic costs equivalent to around $2.1 billion, although these costs differ from country to country – ranging from almost 0.5% of GDP in Kazakhstan to around 4.25% in Tajikistan (2017 data).
“The water agenda in Central Asia is always viewed through the lens of the Aral Sea disaster,” said Ato Brown, World Bank Country Manager for Kazakhstan. “Today, it is high time for us to start changing the narrative so that Central Asia is known for being an oasis of production and productivity.”
According to a World Bank report, Central Asia is among the regions that have most to gain from properly managing water resources under climate change.
Most of the major rivers in Central Asia cross borders, therefore countries need to coordinate water management to advance sustainable development and climate resilience.
Water resources in the region are sensitive to climate variability, which poses significant challenges to the agriculture and energy sectors.
Since the 1950s, average annual temperatures have increased by 0.5°C in the mountainous areas of southern Central Asia, and glaciers that feed the region’s main rivers – Amu Darya and Syr Darya – have shrunk by a third. With the melting of glaciers, the expected fall in river flows will have a major impact on agricultural production.
By 2025, hydropower is expected to overtake gas as the main fuel source for energy production in Central Asia. Where hydroelectricity production is based on reservoir storage, there can be flow management benefits for climate change adaptation, including flood and drought prevention and mitigation, as well as timely delivery of irrigation and drinking water.
“Central Asian countries need to start with a joint project, and there are opportunities for working together,” said Ato Brown at the Astana Economic Forum. If the countries of Central Asia invest sufficiently and effectively in better water management, they have the potential to become not just economically prosperous and resilient to climate change – but also to provide new opportunities and hope for all their citizens.
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